How can I properly import this .OBJ file?
The trees use alpha maps, and you can see these inside the 3d view, It is meant to be like that until you apply materials.
I'm not sure if this is the case but if it is then this may help. For the water there are 3 things I could think of: 


The.OBJ is so big, that when you zoom out you can't see the water since the 3d view cannot trace that far back. So try zooming into the water.
Try removing doubles by pressing T in the 3D View, and on the left you should see remove doubles button. Also try and recalculate normals, which is right under remove doubles.
Since the model is ripped, the model just might be clipped and the person who ripped it might not have gotten all the water polys.
Select the water and try and move it upwards, from the image it looks like it's colliding with the sand instead of being above it.